First-time Home Buyer Tax Credit

Amid all the debate about the stimulus packages and the mounting federal deficit, we may be able to find a few good opportunities. Although the job market is saturated and zero down home loans are a thing of the past, homes are remarkably affordable. The recent waive of college graduates (apartment dwellers for the past five years) may be able to find a great deal on a new or existing home and the First Time Homebuyer Tax Credit of $8,000 can help pay for it.

Although an $8,000 credit is not a reason to buy a home, it could be a reason to accelerate your search if you are in the market. A deeper look at the tax credit reveals a surprisingly diverse group of people with an opportunity - those who have been in between homes long enough may qualify.

Here are the rules:
1) The deadline is December 1st 2009. The credit can be used to purchase a new or an existing home – but must be your principal residence.
2) There is an Adjusted Gross Income (AGI) phase-out for eligibility. Single taxpayers who exceed $95,000 AGI and Married filing Joint taxpayers who exceed $170,000 do not qualify.
3) The $8,000 tax credit is claimed on your 2009 tax return. It can, however, be claimed on your 2008 tax return to accelerate the benefit or to ensure AGI qualification.
4) It’s refundable. If your total tax for the year is zero, you will receive the $8,000 by check.
5) And the most surprising rule – they define a first time homebuyer as someone who has not owned a principal residence for the past three years.

As with any tax credit, we try to keep an eye out for opportunities that apply to specific clients. However, we would be happy to discuss it if you think this may apply to you (or, more likely, your children or grandchildren). As taxpayers, we all pay for programs like these, so why not take advantage. We know we would feel much better knowing that our tax dollars helped some of you.

Please check with your accountant for all specifics.